Do you want to maximise your STR income?  

Let’s look at the key areas involved in setting your price and booking conditions.  I will do this in the context of a pricing tool, like Price-labs or Beyond Pricing, however many of the same factors are involved if you are setting your prices manually.

The goal is to not be in your pricing tool every day.  Set it up, hang back and watch for a week, then tweek if needed.  Having great reporting is critical to this, and we will touch on that later.

What is a Base Price?

Think of your base price as your average price.  This is the price which is adjusted up or down for seasonality, day of week, local occupancy etc.  Think of it as the true market price for your listing.

How do I set my Base Price?

If you are a seasoned host, pick a price which is your average price.  This is not easy if your prices swing a lot.  Ignore extreme outlying prices, the super highs and super lows, and decide on an average high price and an average low price, then pick a price halfway between those prices.  

If you are a new host this is not as hard as it sounds, if you are of a mindset to capitalise on the added exposure Airbnb gives new listings with a goal of ‘seasoning’ the algorithm for future success.   You have 4 weeks [some say 8 weeks some 4] of added boost because you are a new listing.  I suggest that it become your goal in that time to cement your spot high in search results.  You do this in many ways, like communicating quickly, but mostly by getting high occupancy with 5 star reviews.  The key is not to get greedy in your first month, to change your goal from getting rich to locking in your higher position in the search results.  If you don’t get seen, you don’t get booked.

To do this, look at similar local listings.  Look at the location, the number of rooms, do they have pools, and so on.  Then look for similar quality listings given photos, descriptions, fittings, architecture, etc.  Set a lower price as your Base Price and set a generous (20%) discount for last minute bookings.  

If you are new, only open up the next 3 months.  Turn off ‘auto book’.  If you get lots of bookings quickly, raise your Base Price’, if you get minimal bookings, lower your base price.

What minimum stay length should I set?

Minimum stays can get complicated with normal stay length, last minute stay length, orphan days stay length, weekend stay length and so on.  

Friday to Sunday, is a very popular 2 night booking and ‘easy’ to get with short notice.  But accepting that 2 night booking locks out your weekend ‘cheaply’ compared to a nice 3 night weekend booking.

One strategy is to set a 3 night minimum for bookings starting on Thursdays and Fridays, taking that booking to Sunday or Monday.  Set this as a minimum until 1 week [or 2 weeks] out, and change it to a 2 night minimum to lock in a booking. This avoids a 2 night Thursday to Saturday, or a Friday to Sunday booking until the last minute.

This is a powerful approach, especially if used along side last minute discounts.  Do not change your length of stay on the same day that you introduce a last minute discount.  Decrease your minimum length of stay, wait a couple of days, then implement a last minute discount.  All of this can be automated with a pricing app.

Then you are free to set a longer minimum for further out in your calendar should you choose.  

Does Airbnb preference long term bookings to hosts that only accept long term stays?  Anecdotally, I would say yes.  I know of managers of many stays who have changed to 7 night minimums and who are now routinely getting those long stays where before they seldom had long bookings.  I too have found this with my listings.  This makes sense.  If you were Airbnb and you had some hosts that only accepted 7 day bookings, and hosts that accepted 3 night bookings, wouldn’t you show the listings with 7 night minimum to a customer searching for a 7 night stay before showing them a listing that accepts 3 nights and longer?  Do not be scared to set longer minimums, especially if you are getting tired of short term stays and need a break.  

How do I set a minimum price for my Airbnb?

The pricing apps will make adjustments to your Base Price but will not go lower than your Minimum price.  Keep in mind that any minimum or maximum price you set will not influence your base price.  Some apps allow you to set seasonal minimum prices.

Minimum price is an important number to have in mind and to enter in any pricing app.  Do you know the cost price of a night in your listing?  Even a rough calculation of all your costs over the year divided by 365 plus any shortfall in cleaning cost will help.  

Some hosts have a very strong idea on what their listings are ‘worth’, and sure for the high season that may be accurate, but that potentially leaves out a large chunk of the year.  You can say, ‘I’d rather have it empty than take too little for it’, and that is valid and gives you a window to do repairs and deep cleaning and maintenance, however it also drops your total earnings for the year.  Having higher occupancy, even with some nights at a lower rate leads to higher revenue.  There are big dollar gains to be had by accepting lower prices in the low and shoulder seasons.  

The pricing apps give your some great reporting features to help you set your minimum price.  Looking at a report like Beyond Pricing’s ‘percentage of unbooked nights at minimum price’ can give great insights.  Let’s say 30% of your nights in August were vacant at your minimum price, that tells you your minimum was too high.  

Every night you are empty is also the lost opportunity to introduce a new customer to your listing.  That person may come back at a higher rate, they may share you with a friend.  Importantly you also get another review and you show the Airbnb algorithm that you are popular with high occupancy, getting you added exposure on search results and possible higher later earnings.  

One way to increase your occupancy is to reach out to guests and offer big discounts on additional days, added before or after their stay.

How to set last minute discounts?

What is last minute? Last minute is is different in Hawaii and New York.  Booking lead time changes depending on many variables.  Eight room houses, for example, book further out than one room appartments.  Lead time changes by season and, as mentioned, by location.

Look in on this setting every month or so using the reports to give you data on how often people book with a last minute discount.  If this percentage is 10-20% that is probably ok, if it is higher, then you are discounting your normal bookings by offering a discount to soon.  If it is lower than 10% then the discounts are too weak and are not working.

What is your average booking lead time?  Again, booking apps have reports on this, but you probably have a gut number in mind.  

How to set premiums for bookings into the future?